Despite a $900 million write-down against its quarterly earnings for excess Surface RT inventory, or more precisely because of it, Microsoft launched a new ad to promote the hybrid tablet/laptop at a $150 discount from its original $499 price.
The 32GB $349 unit is compared to a 32GB $599 iPad in the ad, with an Apple Siri-like voice, representing the iPad, saying, "I'm sorry, I don't have a USB port...This is not going to end well for me," and concluding with the question, "Do you still think I'm pretty?"
What's clear is that things have not been going well for Microsoft's Surface RT. Apple's iPad has sold well over 100 million units and has close to 50 percent of the entire tablet market.
In small print the ad notes that the slick, attachable keyboard costs $100, but fails to acknowledge that only 15GB of the 32GB is available for storage.
In a fit of both hubris and desperation, Microsoft is trying to make lemonade out of lemons. The pricing could sway some users looking for a low-cost, well-endowed tablet that runs Microsoft Office, but the requirement to learn how to use the new Windows tiled interface and live with a deficit of apps compared with iOS and Android will get in the way. The iPad has more than 400,000 apps compared with around 100,000 for Surface RT. In addition, there is the buying-confusion factor that comes from having Surface RT and the Surface Pro, as well as a growing number of third-party Windows 8 tablets and laptops.
Microsoft executives still think the Surface RT, which runs a version of Windows 8 that works with ARM processors, is worth saving, even after its disastrous start. Brian Hall, head of Surface Marketing, said that going forward, Microsoft is 100 percent committed to Surface RT and Windows RT.
"We know we need a lot of Surface users to start the fly wheel of people recommending it," Hall said.
The Surface is caught in the chicken-and-egg trap. If Surface -- and the entire class of Windows 8-based tablets and smartphones -- doesn't have a lot of users, developers won't be compelled to support it. And, it's difficult to attract new users with a dramatically different interface that lacks the broad range of apps.
The bigger problem for Microsoft is that the mobile train has left the station, driven by iOS and Android. A Surface RT fire sale isn't going to solve the fundamental problems Microsoft faces in getting its mobile act together, or render the kind of recommendations that start the fly wheel spinning.
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